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Calculate what is the acquisition cost of the franchise

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Question - At the beginning of current year, BrownCompany signed an agreement to operate as a franchise of Black Company for an initial franchise fee of P10,000,000.

Brown Company paid P4,000,000 down and agreed to pay the balance in three equal annual payments of 2,000,000 at the end of each year. Brown Company can borrow at 10% for a loan of this type. Calculate what is the acquisition cost of the franchise?

Reference no: EM132945271

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